30–40%
of a contractor's working capital is blocked by bank guarantees, limiting growth.
Surety Bond Insurance
Guarantee the project.
Free your working capital.
A collateral-free alternative to bank guarantees for India's contractors and MSMEs.
Why India needs surety bonds
The numbers behind the need.
$1.4 trillion
planned under India's National Infrastructure Pipeline (FY20–25).
₹4–5 lakh cr
lost every year to project delays from contractor defaults
30%
of GDP comes from MSMEs, who struggle to secure bank guarantees
$17 bn
US surety bond market; India is in early stages of adoption
95%+
project completion rates in global surety markets
How a surety bond works
Contractor
Premium · no collateralRecovers claim if contractor defaults
Insurer (Surety)
Guarantees performancePays only in case of default
Project Owner
- Regulated by IRDAI
- Used in infrastructure & govt contracts
- Supports India's Ease of Doing Business
Compare before you commit
Bank Guarantee vs Surety Bond
| Feature | Bank Guarantee | Surety Bond |
|---|---|---|
| Nature | Instrument issued by a bank | Insurance product issued by insurer |
| Collateral | Collateral or margin money required | No collateral; risk-assessed |
| Working capital | Blocked by collateral requirements | Freed up for contractors |
| Risk bearer | Bank pays if conditions are met | Surety pays only in case of default |
| Regulation | RBI & banking regulations | IRDAI, under insurance laws |
| Usage | Contracts, trade finance & guarantees | Infra, construction & govt contracts |
| Claim payment | Immediate, upon demand | After verifying default & loss |
| Cost | Higher: collateral + interest charges | Lower premiums |
| Flexibility | Limited: stringent banking norms | Customised solutions |
4 types of bonds across a project
Protection at every stage.
- 01
At bidding
Bid Bond
Winning bidder takes up the project at the quoted price
- 02
During execution
Performance Bond
Guarantees the project is completed as per contract terms
- 03
On advance payment
Advance Bond
Ensures advance payments are used properly, not misused
- 04
After completion
Maintenance Bond
Covers defects or issues arising after project completion
Surety bonds also provide
- Cover for delays, quality issues & contract breaches
- Payment protection for subcontractors, suppliers & workers
- Legal & compliance support on contract obligations
Case study
When a contractor defaults
60% WORK DONE40% OF WORK LEFT INCOMPLETE
ABC Infra
Contractor · cash flow crisis
Metro Rail Corporation
Project owner
₹50 cr advance paidCLAIM FILED under the surety bond
- 1
Investigation
The surety assesses the situation and confirms the contractor can't fulfil the contract.
- 2
Compensate or complete
Surety pays the ₹20 cr bond value to Metro Rail, or appoints another contractor to finish within budget.
- 3
Recovery
Surety recovers the claim from ABC Infra through legal means, keeping the contractor accountable.
Final outcome
- Metro Rail
- No financial loss; project continues
- ABC Infra
- Bears consequences, avoids complete bankruptcy
- Surety
- Ensures completion, recovers the claim
Apply with Share India: documents required
Company
- Duly filled proposal form
- Corporate presentation
- Key personnel & technical capability
- Contractor's licence (PWD or equivalent, for infra)
Financials
- Last 5 years' financials (each JV partner)
- Credit rating certificate
- Current BG facilities: rate, collaterals, cash margins
Track record
- Past completed & present projects
- Future orders
This project
- Work order / tender bid document
- Contract / RFP or relevant surety clauses
- Financing sources for the project
Rating from a leading CRA:
- CRISIL
- ICRA
- CARE
- Acuité
- Brickwork
- India Ratings
- INFOMERICS
Unlock your working capital.
Talk to Share India Insurance Brokers.